Extracellular signaling ligands are highly potent and can induce responses in many cell types. Many ligands, such as the conserved Wnt family of signaling ligands, are active at both high and low concentrations. Because they can function so broadly, it is essential that tissues and organs control the extracellular levels and diffusion of these signaling proteins. In this proposal, we investigate how a Wnt protein emanating from a single source functions in in the Drosophila ovary to signal differentially to proximal cells and distal cells. Our analysis shows that this Wnt pool regulates both the germline and follicle stem cells, which must ultimately coordinate to build an egg. Both types of Wnt signaling are altered by a new molecular module, composed of the glypican Dally-like protein (Dlp) and a matrix metalloproteinase (Mmp2). In the first Aim, we analyze how the Dlp/Mmp2 module has different functions in regulating proximal and distal Wnt signaling. In the second Aim we investigate how Dlp trafficking is altered by Mmp2 at a cellular level. In the third Aim we investigate how a small group of Wnt-secreting cells coordinate their production by taking turns maintaining constant extracellular levels of Wnt protein. This work is significant in understanding how tissues harness potent extracellular signals to perform multiple tasks.